Markets Live: ASX selloff resumes

A series of interest rate increases in the US could trigger a bout of asset selling that would dry up liquidity and lead to big losses for investors, says the head of global credit for global investment manager AllianceBernstein.

Ashish Shah says although the long-anticipated start to monetary tightening by the US Federal Reserve was unlikely to force panic selling, it could signal the start of renewed volatility in risk assets such as corporate bonds and overpriced growth stocks.

These have proved popular among yield-seeking investors - particularly from the retail side - since the advent of quantitative easing (QE), or bond-buying, by the Fed and other central banks in the wake of the global financial crisis.

While the QE programs have brought stability to sovereign bond markets and long-term financing, they had also given rise to crowded trades in credit, equity and other markets, said Shah.

When financial markets are liquid, the easy match-up of buyers and sellers means pricing and timing suits both parties. However, a market event which triggers mass selling of an asset can quickly drive down prices if vendors far outnumber buyers.

New day, new government - well, sort of, writes BusinessDay columnist Michael Pascoe:

At least the promise of a new government, even though in his first outing as restored Liberal leader, Malcolm Turnbull was very strongly indicating he would keep his less-right-wing proclivities under strict control.

Indeed, the only concrete policy issue touched on on Monday night was to confirm the Abbott regime's whacky "Direct Action" climate policy. It looks like Malcolm has learned from his mistakes as it was his commitment to an emissions trading scheme (ETS) that allowed Abbott to take his job as opposition leader by one vote.

That is a slight worry – an early example of Liberal Party politics trumping policy from the get-go of his prime ministership. Analyse Turnbull's first public words as PM and they were as much about hosing down his party's right wing as promising the nation better government.

After all that the coalition has invested in demonising the pricing of carbon, it shouldn't be a surprise that an ETS won't be adopted any time soon – never mind that a much higher proportion of economists recommend carbon pricing than dentists use whatever that brand of toothpaste is.

So which sectors of the market are expected to do better under a PM Turnbull?

Prime Value Asset Management co chief investment officer ST Wong says media companies could benefit from hopes that Turnbull would carry on his advocacy work as Communications Minister.

"As Communications Minister, Malcolm Turnbull has been a strong advocate for media reforms in Australia, particularly the abolition of media ownership restrictions," Wong says.

"The abolition of the "reach rule" could gather further support with Malcolm Turnbull as PM."

Peak Asset Management executive director Niv Dagan agrees, adding Turnbull is a "free-market believer" and "conscious of Australia's weak business and consumer confidence".

Last month, Smart Investor editor James Frost got a rare insight into how our 29th Prime Minister invests his money.

The Turnbulls' property holdings are dotted across Potts Point and Point Piper, extending to Canberra and the Hunter Valley, topped off with a New York apartment.

But it is Turnbull's equity market exposures – an intriguing mix of highly regarded hedge funds combined with passive exchange-traded funds or ETFs – that proves the most revealing.

First, there are the ETFs such as the SPDR S&P 500 that are available on the ASX to anyone for just 5.5 basis points and provide access to some of the biggest companies in the world, including Apple, Microsoft and Berkshire Hathaway.

Midway through 2014 Turnbull added Vanguard's Information Technology ETF, which contains many of the same big technology names – Apple, Google, Facebook – but in much higher proportions than the S&P 500.